Non-banking finance company Muthoot Fincorp on Monday said it has raised Rs 125 crore through issuance of covered bonds.
Covered bonds are debt securities issued by a bank or financial institution and collateralized against a pool of assets that in case of failure of the issuer, can cover claims at any point of time.
The company, which is a part of Muthoot Pappachan Group, issued bonds having a tenure of 28 months, offering a coupon of 9.5 per cent per annum payable monthly, a release said.
"While covered bond market has a considerable size of around Euro 2.6 trillion globally, it is still in a nascent stage in India with only a handful of issuances till date. This issue enables us to open to a vast market that has appetite for high rated bonds," Muthoot Fincorp's managing director Thomas John Muthoot said.
The issue opened and closed on March 5.
Unlike asset-backed securities created in securitization, the covered bonds continue as obligations of the issuer. The investor has recourse against the issuer and the collateral also known as dual recourse.
Muthoot Fincorp provides retail finance, predominantly in the form of secured and unsecured loans to the middle and low income customers.
The company claims to serve two million customers from its around 3,600 branches across the country.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)
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